Employers Oppose ACA’s Mandate but Few Face Penalties

By Stephen Miller, CEBS Apr 19, 2016

U.S. employers’ opposition to key features of the Affordable Care Act (ACA) is not abating.

In a recent survey of 644 employers, HR consultancy Mercer asked what changes they would like to see made to the ACA. Repealing the excise tax on high-value health plans was first, with 86 percent in favor. But a close second was getting rid of the “play or pay” rule—the mandate to offer coverage that meets ACA requirements or pay a penalty—with repeal favored by 70 percent.

“It’s not because they don’t want to offer coverage. It’s because proving that they offer coverage is so much work,” said Tracy Watts, Mercer’s leader for health reform.

Employer “Wish List” for Changes to the ACA

Proposed Change

Employers Favoring the Change

Eliminate the excise tax on high-cost plans


Repeal the employer mandate


Change the definition of a full-time employee to 40 hours per week


Repeal and replace the ACA entirely


Repeal the individual mandate


Allow employees to use employer-provided stand-alone health reimbursement arrangements (HRAs) to purchase individual coverage


Mercer survey, Living with Health Reform (2016)

Compliance and Reporting Burdens

When asked about the impact of the ACA on their organization:

84 percent of employers said that the additional administrative burden imposed by the ACA has had a significant impact, and 51 percent describe it as “very significant.”

29 percent said they have made unwanted plan design changes to avoid excise tax exposure.

20 percent said they have experienced higher costs.

In 2016, 155 million people, or 57 percent of the population under age 65, will receive employment-based health coverage, according to the federal government. “More than half of Americans already get their health insurance from their employer, and three out of four workers are satisfied with their health benefits,” said Watts. “Under play or pay, employers have had to modify their plans, track worker hours, manage eligibility and report coverage to prove they are doing something they have been doing all along.”

The requirement to offer coverage to “substantially all” employees working 30 or more hours per week became harder to meet in 2016, when the definition of “substantially all” increased from 70 percent to 95 percent, Beth Umland, Mercer’s research director for health and benefits, said. Failing to cover full-time but limited-duration employees, such as long-term temps and interns, could now trigger an assessment.

About one in four respondents said they will pull back on use of these workers, and another 16 percent are considering it, the survey showed.

Few Face Coverage Penalties

This year’s deadline for employers with 50 or more full-time employees or equivalents to report to the IRS about 2015 coverage was extended from March to June. And despite their gripes over the ACA’s compliance requirements, virtually none of the survey respondents believe they will be liable for the “A” penalty—meaning they all offered coverage to substantially all employees working 30 or more hours per week. Just 8 percent thought they might be at risk for the “B” penalty—meaning that some of their employees might qualify for, and obtain, subsidized coverage on the ACA’s public exchange because their employer’s plan did not offer affordable contributions or meet minimum plan value requirements.

“This suggests that penalties are not going to amount to a huge source of revenue,” said Umland. The Congressional Budget Office (CBO) estimates that employer mandate-related penalties from the ACA will raise $9 billion in revenue in 2016. That might seem high, but President Barack Obama’s 2016 federal budget calls for raising total revenues of $3.525 trillion. Opponents of the employer mandate argue that the loss of the relatively modest revenues generated through employer penalties shouldn’t prevent the mandate’s repeal.

Enrollment Levels Mostly Unaffected

About three-fourths of employers said that their enrollment levels have not changed due to the ACA. While 22 percent have seen an increase in enrollment, most said the increase was slight (less than 5 percent) and 4 percent said enrollment had decreased.

The ACA’s Effect on Plan Enrollments

A majority had no change in enrollment due to the Affordable Care Act, but almost one-fourth saw an increase.

Source: Mercer survey, Living with Health Reform (2016)

The finding is in line with a March 2016 CBO study that reports virtually no change in the number of people obtaining health insurance from their employer since the ACA was enacted in 2010.

Mercer’s Living with Health Reform survey was fielded in February 2016. Among the respondents, 32 percent had fewer than 500 employees, 20 percent had 500 to 4,999 employees and 48 percent had 5,000 or more employees.

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow me on Twitter.

Related SHRM Articles:

‘Where’s My 1095?’ Addressing Tax Filing Confusion, SHRM Online Benefits, March 2016

IRS Extends Deadlines for Reduced Penalties for Correcting ACA Information Returns, SHRM Online Benefits, January 2016


Job Finder

Find an HR Job Near You
Post a Job


Join us for the largest and best HR conference in the world, June 23-26, 2019 in Las Vegas.



Find the Right Vendor for Your HR Needs

SHRM’s HR Vendor Directory contains over 10,000 companies

Search & Connect